A firm is considering expanding its current operations and has determined the internal rate of return on that expansion is 12.2%. The firm's WACC is 11.8%. Given this, you know the:

Question

Quizplus · Accepted Answer

Since the project is an expansion project, the risk-level of the project is equal to the risk-level of the current firm. Thus, the project NPV will be positive since the IRR exceeds the required return.

A Firm Is Considering Expanding Its Current Operations and Has